FBR Launches Power Cut Drive Against Unregistered Taxpayers

FBR Launches Power Cut Drive Against Unregistered Taxpayers

Karachi, October 22, 2024 – The Federal Board of Revenue (FBR) has initiated the disconnection of electricity connections for individuals and businesses who have failed to obtain mandatory sales tax registration. This decisive action is part of a broader effort to tighten compliance and curtail revenue losses.

On Tuesday, the FBR issued formal directives to chief commissioners of Large Taxpayers Offices (LTOs), Corporate Tax Offices (CTOs), Medium Tax Office (MTO), and Regional Tax Offices (RTOs) to verify the identities of suspected non-compliant persons. These individuals, engaged in taxable activities, have been operating without proper sales tax registration—a violation of the Sales Tax Act, 1990.

The FBR’s move comes after identifying 500 individuals and entities with industrial and commercial electricity connections who are believed to be evading sales tax obligations. These electricity consumers are suspected of conducting business transactions subject to taxation but have sidestepped the requirement to register under Section 14 of the Sales Tax Act.

According to the FBR, every individual or entity making taxable supplies, including zero-rated supplies, is legally bound to register for sales tax. This obligation ensures transparency in business activities and prevents revenue leakage, critical for sustaining the national exchequer.

The list of suspected tax evaders was compiled in collaboration with various Distribution Companies (DISCOs), which provided details of electricity consumers holding industrial and commercial connections but lacking tax registration. The FBR has instructed its regional offices to appoint focal persons to liaise with the respective DISCOs for complete verification of these consumers’ addresses and activities.

The FBR also mandated the formation of teams comprising tax officers and officials to conduct on-the-ground verifications of electricity connections at the identified addresses. This verification will determine the eligibility of the unregistered individuals for mandatory sales tax registration under Section 14 of the Sales Tax Act, 1990.

Following the verification process, the FBR will forward the details of non-compliant consumers to the relevant authorities for immediate disconnection of their electricity supply under Section 14AB of the Sales Tax Act, 1990. This drastic measure is intended to compel compliance and enforce the rule of law in tax matters.

This crackdown underscores the FBR’s commitment to broadening the tax base and ensuring that all eligible taxpayers fulfill their legal obligations. As the campaign unfolds, businesses and individuals failing to comply with tax laws are likely to face significant financial and operational consequences, setting a stern precedent in Pakistan’s ongoing efforts to combat tax evasion.